Brokers' Views: KBC Peel Hunt

Analyst Henry Carver sees recent weakness in shares of environmental support services group Eaga as creating an ‘excellent’ investment opening.

Boasting ‘strong’ market drivers, Eaga is uniquely positioned, with framework agreements in place with all six major utilities to help them deliver carbon emissions reduction targets. ‘As far as we can see, the fundamentals are unchanged, the core markets are stronger than ever and trading remains buoyant,’ says Carver, forecasting earnings of 13.4p which place the 120p shares on an ‘undemanding’ valuation.

Bet on a vet
Veterinary practice consolidator CVS is highlighted by analyst Charles Hall, who thinks the shares, on his 16.8p forecast for the year to next June, are ‘cheap’. Like-for-like sales were up 2.3 per cent in the second half of last year, supporting his view that ‘the majority of revenues (circa 90 per cent) are non-discretionary’. With CVS’s net debt currently lower than expected, the shares are a buy.

Hall is not a fan, however, of carpet wholesaler and distributor Headlam, whose UK like-for-like sales went sharply in the wrong direction, down 10.7 per cent, in the first half to June. ‘Although the rate of decline should improve, we believe that the pace and level of any recovery will be slow,’ he declares – sell.

Media follower Malcolm Morgan adds publisher Centaur to the sell list, after an update confirmed no immediate signs of a pick-up, with trading remaining tough. Forecasting earnings to fall 80 per cent to 1.8p in the year to June before climbing to 2.3p in 2010, he says other B2B publishers ‘look cheaper’ and, despite increasing his target price ‘from a very cautious 20p to 28p’, he downgrades from his earlier hold.